8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 8-K

CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

May 4, 2006

Date of Report (Date of earliest event reported)

NORTHWEST NATURAL GAS COMPANY

(Exact name of registrant as specified in its charter)

Commission File No. 1-15973

Oregon	93-0256722
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

220 N.W. Second Avenue, Portland, Oregon 97209

(Address of principal executive offices) (Zip Code)

Registrant’s Telephone Number, including area code: (503) 226-4211

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02  Results of Operation and Financial Condition

On May 4, 2006, the Company issued a press release announcing its earnings for the first quarter ended March 31, 2006. A copy of the press release is attached as Exhibit 99.1.

Forward Looking Statements

This report and other presentations made by NW Natural from time to time may contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and other statements that are other than statements of historical facts. The Company’s expectations, beliefs and projections are expressed in good faith and are believed to have a reasonable basis. However, each such forward-looking statement involves uncertainties and is qualified in its entirety by reference to the factors described in Part I, Item IA., “Risk Factors,” and in “Forward-Looking Statements” following Part II, Item 7A., in the Company’s 2005 Annual Report on Form 10-K and “Forward-Looking Statements” in the Company’s most recent Quarterly Report on Form 10-Q that could cause the actual results of the Company to differ materially from those projected in such forward-looking statements.

All subsequent forward-looking statements, whether written or oral and whether made by or on behalf of the Company, also are expressly qualified by these cautionary statements. Any forward-looking statement speaks only as of the date on which such statement is made, and the Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time and it is not possible for the Company to predict all such factors, nor can it assess the impact of each such factor or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	NORTHWEST NATURAL GAS COMPANY
	(Registrant)
Dated: May 4, 2006	/s/ David H. Anderson
	Senior Vice President and
	Chief Financial Officer

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EXHIBIT INDEX

Exhibits	Description
99.1	Press Release of Northwest Natural Gas Company issued May 4, 2006.

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EX-99.1

Exhibit 99.1

NEWS RELEASE

May 4, 2006

FOR IMMEDIATE RELEASE [AT 6:00 A.M. ET]:

NW NATURAL REPORTS RESULTS FOR THE QUARTER ENDED MARCH 31, 2006 & BOARD INCREASES STOCK BUYBACK PLAN

PORTLAND, Ore. – Northwest Natural Gas Company (NYSE: NWN), dba NW Natural, reported net income for the first quarter 2006 of $41.0 million, up 3 percent from $39.9 million in the first quarter of 2005. Earnings for the first quarter were $1.48 per diluted share, up from $1.43 per diluted share last year, a 3 percent increase.

“We had a good first quarter, one that keeps us on track toward our strategic and financial objectives for 2006,” said Mark Dodson, president and chief executive officer. “Our earnings for the quarter were driven by continued strong customer growth and improved operating results from our regulated utility and interstate gas storage activities.”

Among the highlights for the quarter, the company:

• Increased earnings per diluted share by 3 percent to $1.48;

• Added customers at a growth rate of 3.5 percent over the past 12 months;

• Extended terms of the company’s stock repurchase plan, increasing the dollar limit by $50 million to $85 million;

• Had its corporate credit rating upgraded to AA- and commercial paper rating to A-1+ by Standard & Poors; and,

• Was named one of America’s top 100 “best corporate citizens” for the sixth year in a row.

First Quarter Detail

NW Natural’s utility operations earned $39.5 million ($1.43 per diluted share) in 2006, up from $38.8 million ($1.40 per diluted share) in 2005. In addition, the company earned $1.4 million (5 cents per diluted share) in the quarter from interstate gas storage operations, compared to $0.9 million (3 cents per diluted share) in 2005, and a gain of $0.1 million (less than 1 cent per diluted share) from subsidiary and other non-utility operations in the period, compared to $0.2 million (less than 1 cent per diluted share) in 2005.

NW Natural’s total gas sales and transportation deliveries in the first quarter of 2006, excluding deliveries of gas stored for others, were 408 million therms, up 11 percent from 369 million therms in 2005. These increases were driven by customer growth and

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weather that was 3 percent colder than last year’s first quarter, yet was 3 percent warmer than average. Net operating revenues (margin) from utility operations were $122.3 million, or 3 percent higher for the quarter compared to $118.9 million in 2005.

Sales to residential and commercial customers in the first quarter of 2006 were 254 million therms, up 10 percent from 231 million therms last year, due mainly to a return to more average weather for the period and customer growth. Sales to residential and commercial market sectors contributed $110.9 million to margin, up 5 percent from $105.8 million in 2005, including NW Natural’s weather normalization and decoupling mechanisms in Oregon, which contributed a net $0.8 million to margin in the first quarter versus $8.1 million in 2005.

NW Natural had more than 624,000 customers at March 31, 2006, an increase of 3.5 percent over the past 12 months. The company estimates that customer growth contributed 7.1 million therms to sales volumes and $3.3 million to margin during the quarter.

“We continue to add customers profitably throughout our service territory,” said Dodson, “and we continue to look for opportunities to add to this growth, particularly with the expansion of the region’s urban growth boundary to the eastern side of the Portland metropolitan area.” NW Natural is in its 20^th year of adding customers at a rate in excess of 3 percent, which is twice the national average.

Gas deliveries to industrial customers in the first quarter were 154 million therms, up 11 percent from 138 million therms last year, while margins in this sector were $8.5 million.

NW Natural continues to provide gas storage services to customers in the interstate market from its Mist gas storage field, using storage capacity that has been developed in advance of core utility customers’ requirements. Earnings from the interstate gas storage business segment in the first quarter of 2006 were $1.4 million or 5 cents per diluted share, compared to earnings of $0.9 million, or 3 cents a diluted share in the first quarter of 2005. These results include income from gas storage services as well as income from a contract with an unaffiliated company that seeks to optimize the use of NW Natural’s assets by exchanging gas supplies and trading temporarily unused portions of its gas storage and upstream pipeline transportation capacity.

Operations and maintenance expenses in the first quarter of 2006 were up $1.1 million, or 4 percent, over the same quarter in 2005 when O&M costs increased 7 percent. The 2006 increase was primarily due to higher payroll related expenses and higher benefit costs ($0.7 million), and an increase in uncollectible accounts expense ($0.5 million) related to higher gross operating revenues. The company also began expensing stock options January 1, which resulted in a $0.3 million increase in O&M costs. Bad debt expense as a percent of revenues was 0.41 percent for the first quarter of 2006 compared to 0.38 percent for the first quarter of 2005.

According to Chief Financial Officer David Anderson, “we are beginning to see a structural shift in our operating and maintenance costs, with more cost savings to be identified and implemented over the next few years. Excluding bad debt expense, which

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is covered by revenue increases, O&M increased approximately 2 percent. Our plans continue to target O&M costs to grow slower than customer growth.”

During the period, Oregon customers saved $3.7 million in lower gas costs due to the company’s commodity cost sharing mechanisms. NW Natural’s share of the commodity savings and off-system sales margins realized from its gas purchasing program in the first quarter of 2006 contributed $1.8 million of margin in the first quarter, which was equivalent to last year’s results for the period. In Washington, 100 percent of all gas costs are passed through to customers.

Cash provided by operating activities in the first quarter of 2006 was $98 million, compared to $115 million in 2005. The lower results mainly reflect temporarily higher working capital requirements due to higher gas prices and the timing of payments associated with gas hedge contracts. The company expects that internally generated cash in 2006 should be adequate to meet anticipated capital expenditures.

The company’s capitalization at March 31, 2006 reflected 51.6 percent common equity, 41.8 percent long-term debt, and 6.6 percent short-term debt versus 54.0 percent common equity, 43.7 percent long-term debt, and 2.3 percent short-term debt at March 31, 2005.

Share Buyback Program Extended and Increased

The Board of Directors approved an extension to the company’s share repurchase program to May 31, 2007 and increased the repurchase authority from 2 million shares to 2.6 million shares and increased the dollar limit by $50 million to $85 million. Since the program’s inception in May 2000, the company has repurchased more than 777,000 shares at a total cost of $23.5 million.

Outlook for 2006

NW Natural confirmed its prior estimate that its full-year earnings per diluted share in 2006 will be in the range of $2.12 to $2.27. The company’s earnings guidance assumes normal weather, continued strong customer growth, benefits from cost reduction initiatives, and no significant changes in current regulatory policies. The company continues to target long-term earnings per share growth of 5 percent or more and to maintain a dividend payout ratio of 60 to 70 percent.

Dividend Declaration

The Board of Directors of NW Natural on April 3, 2006 declared a quarterly dividend of 34.5 cents per share on the company’s common stock. The dividends will be paid on May 15, 2006 to shareholders of record on April 28, 2006. The current indicated annual dividend is $1.38 per share.

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Presentation of Results

In addition to presenting results of operations and earnings amounts in total, NW Natural has expressed certain measures in this press release in cents per share on a diluted basis. These amounts reflect factors that directly impact the company’s earnings. NW Natural believes this per share information is useful because it enables readers to better understand the impact of these factors on its earnings.

Conference Call Arrangements

As previously reported, NW Natural will conduct a conference call and Webcast starting at 11:00 a.m. ET (8:00 a.m. Pacific Time) on May 4 to review its first quarter financial results of operations.

To hear the conference call live, please call 800-299-9086 or 617-786-2903 from international points, including Canada. Participants will be asked for their name, company name, phone number, the name of the conference they will be joining (“NW Natural”) and the conference passcode (30801125). A replay of the call will be available approximately two hours after completion of the conference until May 18, 2006. To access the recording, call 888-286-8010, and enter the conference replay passcode number 70493813.

To hear the conference by Webcast, log on to NW Natural’s corporate Website at www.nwnatural.com and select the Webcast icon on the home page. A replay of the Webcast will be available approximately two hours after the conference concludes.

Forward Looking Statements

This report and other presentations made by NW Natural from time to time may contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and other statements that are other than statements of historical facts. The company’s expectations, beliefs and projections are expressed in good faith and are believed to have a reasonable basis. However, each such forward-looking statement involves uncertainties and is qualified in its entirety by reference to the factors described in Part I, Item IA, “Risk Factors,” and in “Forward-Looking Statements” following Part II, Item 7A, in the company’s 2005 Annual Report on Form 10-K and “Forward-Looking Statements” in the company’s most recent Quarterly Report on Form 10-Q that could cause the actual results of the company to differ materially from those projected in such forward-looking statements.

All subsequent forward-looking statements, whether written or oral and whether made by or on behalf of the company, also are expressly qualified by these cautionary statements. Any forward-looking statement speaks only as of the date on which such statement is made, and the company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time and it is not possible for the company to predict all such

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factors, nor can it assess the impact of each such factor or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement.

About NW Natural

NW Natural is headquartered in Portland, Ore., and serves over 624,000 residential and business customers in Oregon and southwest Washington. It is the largest independent natural gas utility in the Pacific Northwest. With customer growth in excess of 3 percent for 19 consecutive years, it is also one of the fastest-growing local distribution companies in the nation. NW Natural has over $1.8 billion in total assets, which includes nearly 14 bcf of underground gas storage capacity within its service territory at Mist, Ore. The company has in place rate mechanisms that help to protect revenues from warmer than average weather and declining consumption. NW Natural has increased its dividends paid on common stock for 50 consecutive years.

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INVESTOR CONTACT:	Bob Hess
	503-220-2388
	Bob.Hess@nwnatural.com
PRESS CONTACT:	Steve Sechrist
	503-220-2594
	sms@nwnatural.com

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NORTHWEST NATURAL GAS COMPANY

Comparative Income Statement

(Consolidated - Unaudited)

	Three Months Ended
(Thousands, except per share amounts)	3/31/06		3/31/05		Increase		% Change
Gross Operating Revenues	$	390,391	$	308,777	$	81,614	26	%
Net Income	$	41,033	$	39,887	$	1,146	3	%
Average Shares of Common Stock Outstanding		27,584		27,578		6	—
Basic Earnings Per Share of Common Stock	$	1.49	$	1.45	$	0.04	3	%
Diluted Earnings Per Share of Common Stock	$	1.48	$	1.43	$	0.05	3	%
	Twelve Months Ended
(Thousands, except per share amounts)	3/31/06		3/31/05		Increase		% Change
Gross Operating Revenues	$	992,100	$	761,931	$	230,169	30	%
Net Income	$	59,295	$	57,847	$	1,448	3	%
Average Shares of Common Stock Outstanding		27,565		27,418		147	1	%
Basic Earnings Per Share of Common Stock	$	2.15	$	2.11	$	0.04	2	%
Diluted Earnings Per Share of Common Stock	$	2.15	$	2.10	$	0.05	2	%

NORTHWEST NATURAL GAS COMPANY

Consolidated Balance Sheets (unaudited) Thousands	March 31, 2006			March 31, 2005
Assets:
Plant and property:
Utility plant	$	1,890,633		$	1,814,991
Less accumulated depreciation		547,635			514,785
Utility plant - net		1,342,998			1,300,206
Non-utility property		40,953			34,157
Less accumulated depreciation and amortization		6,221			5,408
Non-utility property - net		34,732			28,749
Total plant and property		1,377,730			1,328,955
Other investments		54,432			57,198
Current assets:
Cash and cash equivalents		7,522			2,740
Accounts receivable		97,859			73,776
Accrued unbilled revenue		47,764			38,880
Allowance for uncollectible accounts		(4,526	)		(3,499	)
Gas inventory		35,906			23,139
Materials and supplies inventory		9,808			8,262
Prepayments and other current assets		57,330			21,429
Total current assets		251,663			164,727
Regulatory assets:
Income tax asset		66,757			65,622
Deferred environmental costs		19,196			7,231
Deferred gas costs receivable		13,522			12,978
Unamortized costs on debt redemptions		6,776			7,215
Other		—			6,732
Total regulatory assets		106,251			99,778
Other assets:
Fair value of non-trading derivatives		40,879			88,634
Other		9,102			7,305
Total other assets		49,981			95,939
Total assets	$	1,840,057		$	1,746,597
Capitalization and liabilities:
Capitalization:
Common stock	$	87,335		$	87,244
Premium on common stock		296,281			299,900
Earnings invested in the business		237,205			214,864
Unearned stock compensation		—			(809	)
Accumulated other comprehensive income (loss)		(1,911	)		(1,818	)
Total common stock equity		618,910			599,381
Long-term debt		501,500			483,875
Total capitalization		1,120,410			1,083,256
Current liabilities:
Notes payable		50,400			10,500
Long-term debt due within one year		28,000			15,000
Accounts payable		91,185			84,693
Taxes accrued		25,876			22,074
Interest accrued		11,623			11,171
Other current and accrued liabilities		38,703			34,320
Total current liabilities		245,787			177,758
Regulatory liabilities:
Accrued asset removal costs		173,936			157,975
Unrealized gain on non-trading derivatives, net		23,937			78,205
Customer advances		1,924			1,592
Other		4,283			—
Total regulatory liabilities		204,080			237,772
Other liabilities:
Deferred income taxes		220,568			206,651
Deferred investment tax credits		4,479			5,155
Fair value of non-trading derivatives		17,586			10,429
Other		27,147			25,576
Total other liabilities		269,780			247,811
Commitments and contingencies (see Note 7)		—			—
Total capitalization and liabilities	$	1,840,057		$	1,746,597

NORTHWEST NATURAL GAS COMPANY

Consolidated Statements of Cash Flows (unaudited) Thousands (three months ended March 31)	2006			2005
Operating activities:
Net income	$	41,033		$	39,887
Adjustments to reconcile net income to cash provided by operations:
Depreciation and amortization		15,830			15,195
Deferred income taxes and investment tax credits		(3,267	)		(5,822	)
Undistributed earnings from equity investments		50			137
Allowance for funds used during construction		(133	)		(86	)
Deferred gas costs - net		(6,548	)		(3,427	)
Non-cash expenses related to qualified defined benefit pension plans		1,441			1,159
Deferred environmental costs		(2,014	)		(230	)
Income from life insurance investments		(1,383	)		(452	)
Other		4,673			(1,790	)
Changes in working capital:
Accounts receivable - net		(11,982	)		(12,077	)
Accrued unbilled revenue - net		33,748			25,521
Inventories of gas, materials and supplies		40,447			35,076
Income taxes receivable		13,234			15,970
Prepayments and other current assets		(2,249	)		3,644
Accounts payable		(44,102	)		(17,785	)
Accrued interest and taxes		21,856			20,106
Other current and accrued liabilities		(2,231	)		152
Cash provided by operating activities		98,403			115,178
Investing activities:
Investment in utility plant		(15,002	)		(19,958	)
Investment in non-utility property		(106	)		(194	)
Proceeds from sale of non-utility investments		—			3,001
Proceeds from life insurance		964			—
Other		1,475			746
Cash used in investing activities		(12,669	)		(16,405	)
Financing activities:
Common stock issued, net of expenses		859			2,569
Common stock purchased		(398	)		(2,895	)
Change in short-term debt		(76,300	)		(92,000	)
Cash dividends paid on common stock		(9,516	)		(8,955	)
Cash used in financing activities		(85,355	)		(101,281	)
Increase (decrease) in cash and cash equivalents		379			(2,508	)
Cash and cash equivalents - beginning of period		7,143			5,248
Cash and cash equivalents - end of period	$	7,522		$	2,740
Supplemental disclosure of cash flow information:
Interest paid	$	970		$	970
Income taxes paid	$	—		$	—
Supplemental disclosure of non-cash financing activities:
Conversion to common stock:
7-1/4 % Series of Convertible Debentures	$	—		$	152

NORTHWEST NATURAL GAS COMPANY

Financial Highlights

(Unaudited)

First Quarter - 2006

	3 Months Ended Mar. 31,						% Change		12 Months Ended Mar. 31,						% Change
(Thousands, except per share amounts)	2006			2005					2006			2005
Gross Operating Revenues	$	390,391		$	308,777		26	%	$	992,100		$	761,931		30	%
Cost of Sales		255,399			180,608		41	%		638,651			437,436		46	%
Revenue Taxes		9,528			7,183		33	%		23,978			17,941		34	%
Net Operating Revenues		125,464			120,986		4	%		329,471			306,554		7	%
Operating Expenses:
O&M		28,247			27,195		4	%		114,268			103,840		10	%
General Taxes		7,573			6,770		12	%		23,988			22,367		7	%
D&A		15,830			15,195		4	%		62,280			58,660		6	%
Total Operating Expenses		51,650			49,160		5	%		200,536			184,867		8	%
Income from Operations		73,814			71,826		3	%		128,935			121,687		6	%
Other Income and Expense - net		518			65		697	%		1,658			2,870		(42	%)
Interest Charges - net of amounts capitalized		9,855			9,128		8	%		38,010			35,935		6	%
Income Tax Expense		23,444			22,876		2	%		33,288			30,775		8	%
Net Income	$	41,033		$	39,887		3	%	$	59,295		$	57,847		3	%
Common Shares Outstanding:
Average for Period - basic		27,584			27,578					27,565			27,418
Average for Period - diluted		27,632			27,863					27,623			27,674
End of Period		27,579			27,551					27,579			27,551
Earnings per Share:
Basic	$	1.49		$	1.45				$	2.15		$	2.11
Diluted	$	1.48		$	1.43				$	2.15		$	2.10
Dividends Paid Per Share	$	0.345		$	0.325				$	1.34		$	1.30
Book Value Per Share - end of period	$	22.44		$	21.76				$	22.44		$	21.76
Market Closing Price - end of period	$	35.49		$	36.17				$	35.49		$	36.17
Balance Sheet Data - end of period:
Total Assets	$	1,840,057		$	1,746,597				$	1,840,057		$	1,746,597
Common Stock Equity	$	618,910		$	599,381				$	618,910		$	599,381
Long-Term Debt (including amounts due in one year)	$	529,500		$	498,875				$	529,500		$	498,875
Operating Statistics:
Total Customers - end of period		624,297			603,330		3.5	%		624,297			603,330		3.5	%
Gas Deliveries (therms)
Res. & Comm. Customers		253,899			230,683					628,658			563,132
Industrial Firm		24,151			21,738					77,376			66,377
Industrial Interruptible		43,188			36,318					155,976			116,220
Transportation		86,698			80,431					334,323			366,987
Total		407,936			369,170					1,196,333			1,112,716
Gas Revenues
Res. & Comm. Customers	$	326,785		$	258,542				$	790,292		$	618,137
Industrial Firm		23,752			17,544					70,455			49,874
Industrial Interruptible		35,352			22,613					113,479			66,019
Transportation		2,807			2,834					10,728			12,194
Other Revenues		(1,440	)		5,153					(3,731	)		8,809
Total	$	387,256		$	306,686				$	981,223		$	755,033
Cost of Gas Sold	$	255,384		$	180,567				$	638,589		$	437,343
Revenue Taxes	$	9,528		$	7,183				$	23,978		$	17,941
Net Operating Revenues (Utility Margin)	$	122,344		$	118,936				$	318,656		$	299,749
Degree Days
Average (25-year average)		1,867			1,867					4,265			4,265
Actual		1,814			1,769					4,223			3,815
Colder (Warmer) than Average		(3	%)		(5	%)				(1	%)		(11	%)